UBM and Informa confirm merger talks

UBM and Informa confirm merger talks

Sunday 8 June 2008 19.01 EDT
First published on Sunday 8 June 2008 19.01 EDT

Discussions are under way to create a £3bn media company that could be large enough to claim a place in the FTSE 100 index of leading shares through the merger of United Business Media and Informa.

Yesterday, Informa, the publisher of Lloyd's List, admitted it had received an approach from UBM about a "possible all-share merger". UBM, an exhibition organiser and publisher of titles such as Property Week and Building Design, confirmed the talks were at "an early stage". The two companies each have a stockmarket value of around £1.5bn.

If agreement is reached, the new company could run straight into a battle with shareholders if, as was suggested yesterday, Informa chief executive Peter Rigby becomes executive chairman. Institutional investors dislike the role as it can put too much power in one individual's hands.

UBM's David Levin is expected to be chief executive, although sources caution that the deal is still being structured and is not yet certain.

It is also possible that the discussions could be scuppered by intervention from private equity players. As recently as last week, Informa's shares were boosted by speculation of private equity interest. The company has been regarded as vulnerable to a bid since losing its former chief executive, David Gilbertson, to Emap, which was bought by private equity group Apax Partners and Guardian Media Group, publisher of the Guardian, three months ago.

At the time, there were suggestions that Germany's Springer could rekindle a takeover approach it made in October 2006. However, financial market conditions have deteriorated considerably since then and the credit crunch is making it harder for private equity groups to raise the loans they need to finance takeovers.

While both companies will confirm their discussions to the stockmarket formally this morning, it is thought that neither side feels under particular pressure to accelerate the friendly talks.

Yesterday, Informa said its board was "considering the proposal and in preliminary discussions with UBM. There can be no certainty that any transaction will take place."

UBM said its confirmation of discussions had been made "with the approval of Informa".

Industry experts noted the logic of combining the two at a time when the media industry is hunkering down for slower economic growth and a reduction in advertising revenue.

A deal would help Informa tackle its £1bn of debt amassed through a number of acquisitions, including Datamonitor last May, for which the City is still punishing the management by holding back its share price.

UBM has been reinvented after shedding its Daily Express titles and stakes in part of the ITV network, and is now largely an exhibition and conference organiser as well as owner of titles such as Travel Trade Gazette. Levin has admitted he is on the lookout for acquisitions after refocusing the group away from print publishing.

The media sector is also awaiting the outcome of a tussle for control of the market research company TNS, which agreed to merge with Germany's GfK only to attract an unsolicited bid from WPP.